'AppleBot Continues To Crawl'...Apple Search Engine Could Have Long-Term Effect On Google
In a report published Wednesday, Axiom Capital Markets analyst Victor Anthony maintained a Hold rating on Google Inc (NASDAQ: GOOGL), with a price target of $615. The analyst said that AOL, Inc. (NYSE: AOL) had entered into a search advertising agreement with Microsoft Corporation (NASDAQ: MSFT), Apple Inc. (NASDAQ: AAPL) continued to crawl Google.
According to final data from RKG, Google's paid clicks declined 1 percent YoY in 2Q15, following flat to down growth in 1Q15. The results marked a steep deceleration from the 18 percent growth achieved in 3Q and 12 percent in 4Q.
CPCs climbed 13 percent YoY, matching the growth in 1Q15, and higher than the 7 percent and 8 percent growth witnessed in 4Q14 and 3Q14, respectively. Paid search spend on Google was up 12 percent YoY, down from 13 percent growth in 1Q15, 19 percent in 4Q14 and 27 percent in 3Q14.
AOL has inked a 10-year global search and search advertising agreement with Microsoft, commencing January 1, 2016. With this in place, AOL dropped Google as a search provider. RKG indicated that AOL constituted merely 1 percent of Google's traffic.
"On a net revenues basis, the revenue loss is approximately $70M, or 10c per share. Hence, the loss is not material. However, with past losses (Mozilla), and potential losses from IAC and Apple, partnership losses, on the whole, are becoming a material risk for Google," analyst Victor Anthony wrote.
According to RKG, Applebot continued to crawl the web. Apple represents 37 percent of Google's clicks in the US on iOS and desktop Safari.
In the report Axiom Capital Markets noted, "The search engine community has long speculated that Apple was building out its own web search capabilities, and speculation was that Apple would have dropped Google as the default search provider on iOS/OS X this past spring."
Anthony added that it was unclear whether Apple had ambitions to compete with Google in search or whether its efforts would be limited to SIRI and Spotlight.
"Either way, Apple's entry into search in any form, while a competitive risk for Google, is unlikely to have a near-term or medium-term impact on Google's search business. Longer-term there is a risk that Apple could be successful and impact Google," Anthony said.
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